One more quarter, one more excuse. Xerox Corp. (NYSE: XRX) CEO Ursula Burns has run out of excuses. Actually, that happened some time ago. After announcing a horrible forecast for future earnings, Xerox’s shares dropped 9% and touched a 52-week low.
Burns was upbeat in comments about the most recent period, as she usually is, no matter what the numbers:
Our earnings are in-line with the guidance we provided. Results in Document Technology, which included the increased impact from foreign currency, largely met our expectations. Several of our Services businesses performed well, but overall Services segment results fell short of our expectations driven by higher implementation costs in certain Health Enterprise platform accounts.
Hitting guidance is not a badge of honor. This is especially true when revenue drops and net profits collapse. Xerox’s revenue dropped 6% in the March quarter to $4.5 billion. Net income fell 20% to $225 million. Operating margins were 7.6%, which Xerox management says was off 1.1 percentage points from the same quarter a year ago.
As for its forecast:
We expect increased currency headwinds, softer signings and acquisition timing to impact revenue; and Services margin to be impacted by increased implementation costs in legacy Health Enterprise accounts. As a result, we are adjusting our full year expectations.
Burns became Xerox CEO in July 2009. She engineered the buyout of Affiliated Computer Services, which cost Xerox $6.4 billion. Meant to help Xerox move beyond its roots in document production, it is hard to find evidence that the strategy worked. In the past five years, Xerox shares have risen 10% while the S&P 500 has moved higher by over 78%.
The Xerox board of directors has held on to Burns for far too long, and according to the company’s proxy it has paid her $37.7 million. The board’s decision is no better than a slap in the face of shareholders.